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Apple exec Scott Forstall sells 95% of company shares worth $38.7M

post #1 of 88
Thread Starter 
Apple's iOS chief Scott Forstall recently sold 65,151 shares of AAPL stock, or 95 percent of his stake in the company, totaling $38.7 million.

Forstall, who is senior vice president for iOS software at Apple, made the transaction last Friday, documents filed with the U.S. Securities and Exchange Commission reveal. The shares were the remains of a retention bonus granted to Forstall in 2008 worth 120,000 shares, as noted by Fortune.

After selling off the bulk of his AAPL stock, Forstall still owns just 2,988 shares in the company. As of Friday's closing price, they were worth $1.8 million total.

Forstall is due to benefit from another 100,000 restricted stock units that fully vest in 2014, and 150,000 restricted units that vest in 2013 and 2016, should he stay with the company.

Forstall surrendered the shares needed to pay taxes on his awards in March, once restricted stock he received in 2008 became fully vested. At the same time, Apple Chief Executive Tim Cook, CFO Peter Oppenheimer and marketing chief Phil Schiller sold hundreds of thousands of shares, netting them a collective total of about $150 million after taxes.

Beyond his own stock bonuses, Forstall earns a salary of $700,000 per year running Apple's iOS software division.

Forstall was profiled in January as Apple's "CEO-in-waiting" by Adam Lashinsky, author of the book "Inside Apple." The book argues that Forstall most closely resembles late Apple co-founder Steve Jobs, making him the most obvious candidate to eventually succeed him.

Forstall and Jobs
Steve Jobs takes the stage from Scott Forstall at WWDC | source: ibtimes.com


Last October, BusinessWeek also profiled Forstall, and called him a "maddeningly political" mini-Steve Jobs. That story claimed that though Forstall is brilliant at identifying what he wants and how to get it, he can also be difficult to work with, and has allegedly prompted the departure of several high-ranking Apple executives over the years.

Whether or not Forstall actually is hard to work with, he's been an integral part of Apple's iPhone and iPad business, which have taken the company's sales ? and stock price ? to new heights.
post #2 of 88

95%! He has watched Tim for a year and concluded he is no Steve.

post #3 of 88

I hope he isn't leaving ...  That next 100,000 should be worth waiting for Scott!

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post #4 of 88
Quote:
Originally Posted by digitalclips View Post

I hope he isn't leaving ...  That next 100,000 should be worth waiting for Scott!

 

40mln+ (only in bonusses) isn't enough ?

post #5 of 88

Can anyone explain what the possible ramifications of this could be?

To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.

Or, if this article rings true about him paying his taxes with the sold stock...that seems a bit odd that his accountant hasn't found some loophole around the tax code to allow him to keep what he had.

With all this talk about corporate loopholes and tax shelters related to stocks and such, it seems odd that paying his taxes off with sold stocks would be a logical alternative.

post #6 of 88

The title is very misleading, since he has interest in a ton of Apple stock if he stays with the company.  

post #7 of 88

Easy, his stock vested, and AAPL is bumping around the all-time high. He's getting TONS more stock in the future.

Why not take some profits and make the bank account grow?

He has to have filed a while ago to be legal, so it's not like he is saying Apple is going down from here.

It's business. And lots of cash.
 

post #8 of 88
Didn't Bob Mansfield sell a bunch of stock a couple months back too? Heck Jony Ive is probably doing the same thing except we don't know about it b/c Apple's not required to report it to the SEC.
post #9 of 88
Quote:
Originally Posted by antkm1 View Post

Can anyone explain what the possible ramifications of this could be?

To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.

 

 

Normally you shouldn't read too much in to a stock sale.  Maybe he wants to buy something?

 

But this is different,

post #10 of 88

Most of these stocks sales have to do with dealing with the tax burden of the vested stock grants given to these officers as incentives. Nothing to see here, everybody chill.

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post #11 of 88
Selling stock is no big deal. Happens all the time.

Clck on Insider Transactions on the left side
http://finance.yahoo.com/q/it?s=AAPL
post #12 of 88

It's a tax thing. If these shares matured (for lack of a better word) around AAPL's high and Forstall has already deferred tax gains from previous years, then he probably owes a whopping tax bill and doesn't want to take the chance of waiting for a better deal this year. Every $10 of share value decrease is $651,510 down the tubes that could be going towards taxes.

 

Just my take... for what it's worth.

 

[I see I was pipped by fecklesstechguy]

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post #13 of 88
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

 

Normally you shouldn't read too much in to a stock sale.  Maybe he wants to buy something?

 

But this is different,

 

Yes, it's different. He has to pay taxes.

 

But that won't stop zzz from trying to use it to cast Apple in a bad light.

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Gatorguy 5/31/13
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post #14 of 88

He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!

post #15 of 88
Quote:
Originally Posted by Obama View Post

He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!

+1

post #16 of 88
Quote:
Originally Posted by antkm1 View Post

Can anyone explain what the possible ramifications of this could be?

To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.

Or, if this article rings true about him paying his taxes with the sold stock...that seems a bit odd that his accountant hasn't found some loophole around the tax code to allow him to keep what he had.

With all this talk about corporate loopholes and tax shelters related to stocks and such, it seems odd that paying his taxes off with sold stocks would be a logical alternative.

You shouldn't read too much into this. Once the RSUs were issued in March, he really didn't have a choice but to sell almost half of them to pay taxes due (likely 35% Federal income tax to the IRS and 9-10% to the California Franchise Tax Board). This wasn't an option grant where he could choose when/if to exercise the grant. The RSUs are issued shortly after the vesting date if all terms and conditions of the agreement are met (e.g., job performance).

 

He could have kept the shares that he didn't sell in March, but the bulk of his holdings were probably still in AAPL, meaning poor portfolio diversification. You really do not want all of your eggs in one basket (ask former Enron employees) and Scott is probably smart enough to know it. All the AAPL senior execs are probably very familiar with Enron's fall, and some of them have left companies that had fallen precipitously (e.g., Mansfield left a crumbling SGI with all of his options underwater).

 

By selling of the majority of the rest of his holdings, Forstall can invest in other companies, bonds, etc. He'll probably increase his holdings in alternative investments, ones that negatively correlate to the stock market.

 

So why did he keep a few shares around? My guess is that he will hold them over a year so they can escape short-term capital gains tax. After that, they might be an "emergency fund" but more likely he would use them for charitable contributions. 

 

In any case, corporate tax rates have nothing to do with individual income taxes. They are filed by different entities (a corporation versus an individual). Scott Forstall has to pay the taxman, just like Apple Inc. does. They have different tax situations, different deductions, and are governed by different tax laws.

post #17 of 88
Quote:
Originally Posted by Obama View Post

He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!


I believe that, unless Congress acts to change things, Capital Gains tax rates go from the current 15% to 35+% this coming January.  That's probably why we're seeing a lot of stock sales like Forstall's and it's not just in Apple.  Sales like this are more like a hedge bet on Congress doing what it's been doing for a long time which is nothing, rather than being based on some insider knowledge of what might happen to Apple.

post #18 of 88
Quote:
Originally Posted by bobinmurphy View Post


I believe that, unless Congress acts to change things, Capital Gains tax rates go from the current 15% to 35+% this coming January.  That's probably why we're seeing a lot of stock sales like Forstall's and it's not just in Apple.  Sales like this are more like a hedge bet on Congress doing what it's been doing for a long time which is nothing, rather than being based on some insider knowledge of what might happen to Apple.

You are misinformed.

 

There are two capital gains tax rates: short-term (for investments held under a year) and long-term (over one year).

 

The short-term capital gains tax rates always match the tax rate for income in the same tax bracket. Thus, if you are in the 28% tax bracket for income, you will be paying 28% short-term capital gains taxes.

 

The current tax laws project an increase in the long-term capital gains tax rate from 15% to 20% (not 35+% as erroneously claimed above) for anyone above the 15% income tax bracket. 

 

Be realistic: long-term capital gains tax rates will never exceed the income tax rate at that bracket. Otherwise, no one would want to invest for the long-term. The lack of long-term investment would likely destroy the world economy.

 

Moreover, the tax brackets themselves will change a bit:

 

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

 

Forstall is probably in the 35% marginal tax bracket. Which makes sense why he had to sell off almost half of the RSUs when they were issued in March. He owned 35% income tax to the IRS plus another 9-10% to California's Franchise Tax Board.

post #19 of 88

Better reporting by Cult of Mac.

 

 

Scott Forstall, Apple’s Senior Vice President of iOS Software, has sold 65,151 shares of his Apple stock — the equivalent of 95% of his stake in the company — for a staggering $38.7 million. He now owns just 2,988 Apple shares, worth around $1.8 million, but if he sticks around, there’s plenty more where they came from.

Forstall’s sale was revealed by documents filed with the U.S. Securities and Exchange commission last Friday. According to Fortunethe shares were the remains of a retention bonus of 120,000 shares that was paid to Forstall back in 2008.

Although Forstall now owns just under 3,000 Apple shares, he’s due to receive a whole lot more over the next four years, should he stay with the company. In 2010, he was granted 100,000 restricted stock units that vest in 2014, and just last year, he was granted another 150,000 restricted stock units that will vest in equal parts in 2013 and 2016.

If Apple’s stock reaches $1,000 per share within the next year, as some analysts have forecast, those shares could be worth a whopping quarter of a billion dollars (italics mine).

On top of those RSUs, Forstall receives an annual salary of $700,000 for running Apple’s iOS software division.

Why is he paid so much? Well, Apple’s iPhone and iPad, which both run the iOS operating system, made up $29 billion of the company’s $39 billion in sales last quarter. iOS is widely considered to be the best mobile operating system available. It’s no wonder Apple wants Forstall to stick around.

_______________________________________

So the guy sells stock worth $40 million.  He still has restricted stock worth about $150 million at current AAPL price.

post #20 of 88
Quote:
Originally Posted by Derek Knight View Post
Not an easy place to be with a volatile and passionate Steve Jobs.  Way to go, Scott!

 

It is when you're much like Steve yourself.

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post #21 of 88

Who knows - this means absolutely nothing. He sold at a good price - historic high; he's got lots more options vesting, pretty much ever year or every other year.

 

Maybe he wants to build a house? A yacht? Girlfriend is expensive? Hookers and blow? Who knows and who cares.

post #22 of 88
Quote:
Originally Posted by bobinmurphy View Post


I believe that, unless Congress acts to change things, Capital Gains tax rates go from the current 15% to 35+% this coming January.  That's probably why we're seeing a lot of stock sales like Forstall's and it's not just in Apple.  Sales like this are more like a hedge bet on Congress doing what it's been doing for a long time which is nothing, rather than being based on some insider knowledge of what might happen to Apple.

 

Quote:
Originally Posted by cvaldes1831 View Post

You are misinformed.

 

There are two capital gains tax rates: short-term (for investments held under a year) and long-term (over one year).

 

The short-term capital gains tax rates always match the tax rate for income in the same tax bracket. Thus, if you are in the 28% tax bracket for income, you will be paying 28% short-term capital gains taxes.

 

The current tax laws project an increase in the long-term capital gains tax rate from 15% to 20% (not 35+% as erroneously claimed above) for anyone above the 15% income tax bracket. 

 

Be realistic: long-term capital gains tax rates will never exceed the income tax rate at that bracket. Otherwise, no one would want to invest for the long-term. The lack of long-term investment would likely destroy the world economy.

 

Moreover, the tax brackets themselves will change a bit:

 

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

 

Forstall is probably in the 35% marginal tax bracket. Which makes sense why he had to sell off almost half of the RSUs when they were issued in March. He owned 35% income tax to the IRS plus another 9-10% to California's Franchise Tax Board.

 

 

It's not that simple - there's more involved than capital gains.

The stock was a grant in 2008. At that time, the total value of the shares would have been counted as income - not capital gains. Capital gains would only  be the increase in value since 2008. 

There's more to the story one way or the other. Given that the grant was in 2008 and that he sold ALL of the shares to pay taxes, something else has happened to increase his tax liability. Either that or he previously sold half of the stock without paying the taxes.

Either way, it's really not important as far as Apple is concerned. He has plenty of incentive to stay regardless of whether he held this batch of stock or sold it.

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post #23 of 88
Stop being so dense, people. If Forstall sold that many shares, then he sees something at Apple that he doesn’t like. He’s had several months of working with Tim Cook, and he realizes that he’s no Steve Jobs. Not to mention the horrible recent hirings of execs from United Airlines, Yahoo, and Dixons… 3 of the worst companies on the planet. The ship is sinking, and Forstall is jumping off while he can. I wouldn’t be surprised if Forstall leaves Apple fairly soon after this stock sale.
post #24 of 88
Quote:
Originally Posted by scotty321 View Post
Stop being so dense, people. If Forstall sold that many shares, then he sees something at Apple that he doesn’t like. He’s had several months of working with Tim Cook, and he realizes that he’s no Steve Jobs. Not to mention the horrible recent hirings of execs from United Airlines, Yahoo, and Dixons… 3 of the worst companies on the planet. The ship is sinking, and Forstall is jumping off while he can. I wouldn’t be surprised if Forstall leaves Apple fairly soon after this stock sale.

 

Uh huh.

 

… I miss our emoticons.

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post #25 of 88

The fact is, he sold most of the vested shares, almost immediately after the open period.

 

If that doesn't mean he smells the (at least short term) top, I don't know what else can that mean.

 

You can say he's diversifying, or for tax reasons, but 95%? The 1st moment you can sell? That can't be good.

post #26 of 88
As someone who doesn't know much about stock etc, this isn't a sign he may be leaving soon / thinking about leaving is it? I really hope not
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post #27 of 88
Quote:
Originally Posted by virginblue4 View Post
As someone who doesn't know much about stock etc, this isn't a sign he may be leaving soon / thinking about leaving is it? I really hope not


I sort of hope so. While we DO need another Steve to take the reigns at Apple eventually, Forstall seems like the wrong one from what I've read.

 

If he can stay and not become CEO, that works, too.

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post #28 of 88
Quote:
Originally Posted by Tallest Skil View Post


I sort of hope so. While we DO need another Steve to take the reigns at Apple eventually, Forstall seems like the wrong one from what I've read.

 

If he can stay and not become CEO, that works, too.

I can't imagine why any Apple - or any other top level exec from any big corp would let money be a factor in where they go and what they do. Its silly money and the one thing it affords you is the option to make career or life choices without having to give a crap about the financial aspects. With 35 million dollar (less taxes) in the bank he can open up a bar and spend his day handing out free drinks if he so pleases. Is money a motivating factor for these guys?

post #29 of 88
Quote:
Originally Posted by Obama View Post

He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!

 

Generally, it is considered bad form to introduce politics into non-political sites. There are plenty of sites for that sort of thing.  Why bring it here?

post #30 of 88
Quote:
Originally Posted by drobforever View Post

The fact is, he sold most of the vested shares, almost immediately after the open period.

 

If that doesn't mean he smells the (at least short term) top, I don't know what else can that mean.

 

You can say he's diversifying, or for tax reasons, but 95%? The 1st moment you can sell? That can't be good.

 

I'd say he was told that AAPL had hit a short term top, probably for this year... and if he was told that he'd have to sell this year for the best tax advantage then no better time than now.

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post #31 of 88
Quote:
Originally Posted by Eternal Emperor View Post
Generally, it is considered bad form to introduce politics into non-political sites. There are plenty of sites for that sort of thing.  Why bring it here?

 

I'm not sure how I feel about play-acting either, but he did it for satire's sake.

 

Quote:

Originally Posted by island hermit View Post

I'd say he was told that AAPL had hit a short term top, probably for this year...

 

Month, more like.

Originally Posted by Marvin

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post #32 of 88
Quote:
Originally Posted by scotty321 View Post

Stop being so dense, people. If Forstall sold that many shares, then he sees something at Apple that he doesn’t like. He’s had several months of working with Tim Cook, and he realizes that he’s no Steve Jobs. Not to mention the horrible recent hirings of execs from United Airlines, Yahoo, and Dixons… 3 of the worst companies on the planet. The ship is sinking, and Forstall is jumping off while he can. I wouldn’t be surprised if Forstall leaves Apple fairly soon after this stock sale.

If you say so. I guess that would make sense that he would make such a rash call after only a few months after years of working with the famously mercurial Steve Jobs.  Could you never down your "soon" so we can have something to talk about if it doesn't happen.

 

They recently issued a lot of stock to Cook. It could also be that he is taking money off the table in the expectation of getting more stock at a new price.

post #33 of 88
Quote:
Originally Posted by Tallest Skil View Post

 

Month, more like.

 

Why would you think this will last just a month.

 

Holiday quarter brought the price to $640. Why would you think that earnings over the next 2 quarters (plus this last quarter), that won't match the holiday quarter, will take the stock higher?

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post #34 of 88
Quote:
Originally Posted by island hermit View Post
Why would you think that earnings over the next 2 quarters (plus this last quarter), that won't match the holiday quarter, will take the stock higher?

 

Why would you think earnings wouldn't match that? Their entire computer lineup is being updated in the next two months. iPhone and iPods in October. Hopefully even new AirPort models. People are waiting.

Originally Posted by Marvin

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post #35 of 88
Quote:
Originally Posted by Tallest Skil View Post

 

Uh huh.

 

… I miss our emoticons.

Yeah, what's up with that!? <<grumble>>

post #36 of 88
Quote:
Originally Posted by Tallest Skil View Post

 

Uh huh.

 

… I miss our emoticons.

 

There isn't one which suits something so stupendously dumb.

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post #37 of 88

Considering the iPhone 5 release is likely to happenin the next 4 months or so; and that the predicted sales of these will be fairly huge - why sell now?

 

This doesn't include the anticipated sales of Apple's TV efforts, nor the Ivy Bridge refresh on their existing hardware - all of which should drive the stock price of Apple even higher.

post #38 of 88
Quote:
Originally Posted by Hodar View Post

Considering the iPhone 5 release is likely to happenin the next 4 months or so

 

Urge to kill… rising… Also, do you really think it would be sooner than October?

 

Quote:

This doesn't include the anticipated sales of Apple's TV efforts, nor the Ivy Bridge refresh on their existing hardware - all of which should drive the stock price of Apple even higher.

 

The latter, sure. *looks around absentmindedly* Oh, did you want me to acknowledge the former? lol.gif

Originally Posted by Marvin

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Originally Posted by Marvin

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post #39 of 88
Quote:
Originally Posted by Tallest Skil View Post

 

Why would you think earnings wouldn't match that? Their entire computer lineup is being updated in the next two months. iPhone and iPods in October. Hopefully even new AirPort models. People are waiting.


Let's see... in October Apple gave a future forecast of $37 billion for the "holiday" quarter and it hit $46.3 billion.

 

This last quarter Apple gave a future forecast of $34 billion for its 3rd fiscal quarter... and you translate that into $47 billion.

 

Bit of a stretch... even by Apple's conservative forecasting.

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post #40 of 88
Quote:
Originally Posted by jragosta View Post

Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

 

Normally you shouldn't read too much in to a stock sale.  Maybe he wants to buy something?

 

But this is different,

 

Yes, it's different. He has to pay taxes.

 

But that won't stop zzz from trying to use it to cast Apple in a bad light.

 

 

I find it extraordinary that he is selling 95%.  How common is that?  Does a comany's stock generally go up when an officer sells 95%

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